Oz regulator “welcomes” debate on limiting net neutrality

ACCC Chairman likes the idea of ISPs charging by time of day and quality of service

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The head of Australia's telecommunications regulator, the Consumer and Competition Commission (ACCC), has signalled he's open to new debate about network access regimes that back away from complete net neutrality.

Speaking at a Brisbane event hosted by Australia-Israel Chamber of Commerce, ACCC Chairman Rod Sims noted that “Content delivery methods are increasingly creating opportunities for new market participants and prompting content providers, both traditional broadcasters and the established online players, to develop and diversify their existing services.”

“Network operators are, therefore, increasingly adopting traffic management practices to manage the use of capacity on their networks. For some, this includes giving priority to time critical data such as voice services and lower priority to content generated by peer-to-peer programs.”

The assumption implicit in that statement is that peer-to-peer is entirely devoted to illegal downloads, which is far from sound. But the thrust of his argument contains some truth (if only because Australians steal an awful lot of TV shows) so we'll proceed to his next point, namely that “The same technical capability that allows network operators to prioritise different categories of traffic, however, could potentially be used to disadvantage competing third party services, such as over-the-top (OTT) voice and messaging services, as has been observed overseas in Korea and the Netherlands.”

Carriers crimping access to third-party services is the third rail of telecoms, as carriers hate being reduced to mere data pipes while Apple and Google haul endless gold out of their app stores. Just what they can do about it is hard to say. If they push back against Apple, they risk losing iPhone-wielding customers. Push back against streaming movies services owned by the likes of Sony and they risk all sorts of fun when they try to create their own download services. And if they decide Spotify or Pandora should work like dogs on their networks, they give customers good reason to look elsewhere.

Sims next observed that “Kate McKenzie from [Australia's dominant telco] Telstra this week also called for an industry debate around the potential for network operators to manage traffic by modifying their pricing practices. She suggested charging consumers based on the quality and time of service they wish to receive rather than simply based on a download cap or data rate.”

“As a long time advocate of congestion pricing for a range of other infrastructure networks, I welcome this call.”

Sims went on to say that under such a regime “network providers should ensure that such practices are transparent and customers can easily understand the implications of these practices on the service they receive” and pointed out that given the tectonics of the internet and telco plates are currently rather unstable “markets can tip toward anti-competitive structures and outcomes in a very short space of time.”

That means “... while markets for the infrastructure and related services for content delivery appear, on the whole, to be operating effectively, we are watching a number of elements of these markets closely to see how they develop.”

Sims' comments need to be understood in their Australian context. Telstra, for example, offers a movie download service and would obviously prefer it offers a better user experience than iTunes. Telstra is also, by legislative fiat, required to offer rival ISPs access to portions of its network. Some of those rivals also offer movie downloads and Telstra may, again, wish the service offered to its own customers to be superior to those offerings.

Sims seems to be suggesting he welcomes debate on whether operators might be able to increase the cost of downloads at certain times of day, to the advantage of their customers. If such a regime became possible, it would be a significant challenge to the concept of net neutrality, which suggests carriers should carry all traffic without prejudice.

Sims' remark that debate on the subject is “welcome” therefore opens a very large can full of very vigorous worms, as it is not hard to imagine Telstra – or another former postal telegraph and telecommunications (PTT) entity with strong market power derived from its ownership of a nation's dominant network – enthusiastically joining a debate about how to throttle rivals. While legislation that insists PTTs share their networks usually prohibits such shenanigans, Telstra a few years ago demonstrated how PTTs can still flex their muscles when it dropped the retail price for internet services to below the wholesale price it offered rivals. That pricing play was eventually struck down, but the time lawyers spent arguing over it was time when competition was diminished.

Also worth noting is that Australia last year conducted a “convergence review” that recommended net neutrality be encoded in local laws. That recommendation was not included in a recent package of bills that, in any case, weren't passed.

Sims doesn't seem to feel that the kind of nasty scenarios outlined above are likely, as content owners – especially football codes – would probably frown on anything that stops audiences watching the spectacles they create. He's therefore said “We have our existing powers, and we will not hesitate to call for more if they are needed.”

Even if the kind of differentiated charges Sims mentions were to become legal, in Australia or elsewhere, one significant barrier remains to their implementation: billing software. Telcos are generally rubbish at billing their everyday activities. It's hard to see a system that charges different rates for downloads made at different times delivering resulting in either improved customers satisfaction or return on investment. ®